Close

Approach for Measuring GHG Emissions within Investment and Loan portfolios

The basic formula for calculating the emissions in investment and loan portfolios (Financed Emissions) is as follows. The Group calculates this based on the basic formula of PCAF as the calculation method for our own Group.

Figure Basic formula for calculating emissions in investment and loan portfolios in PCAF

The general approach to
calculate financed
emissions in PCAF		 Financed Emissions = ∑i ①Attribution factor i × ②Emissions i
  1. ① Attribution factor =  Outstanding amount of the Group's loans and investments Value (Total equity + debt) of borrowers or investees
  2. ②Emissions = Use disclosed Scope 1, 2 and 3 values of borrower or investee. If not available, use the estimated values provided by PCAF.
  • (with i = borrower or investee)
Asset class Attribution factor Emissions
(numerator) (denominator)
(1) Listed equity
  • Outstanding amount in listed equity
    (market value)
  • Company value
    EVIC*
    (borrower or investee company)
  • Company Emissions
(2) Corporate bonds
  • Outstanding amount in corporate bonds
    (book value)
  • Company value
    (Listed company): EVIC*
    (Unlisted company): Total equity +debt
    (borrower or investee company)
  • Company Emissions
(3) Business loans
  • Outstanding loan amount
  • Company value
    (Listed company): EVIC*
    (Unlisted company): Bonds (book value) + Borrowings (book value) + Shareholders' equity (book value)
    (borrower or investee company)
  • Company Emissions
(4) Unlisted equity
  • Outstanding amount of unlisted equity
    (Shares of financial institute ÷ Total shares × Total equity)
  • Company value
    Bonds (book value) + Borrowings (book value) + Shareholders' equity (book value)
    (borrower or investee company)
  • Company Emissions
(5) Commercial real estate
  • Outstanding amount of loans and investments
  • Property value at origination
  • Building emissions
    (energy consumption × emission factor)
(6) Project finance
  • Outstanding amount
  • Shareholder's equity + interest-bearing debt (bonds + loans)
  • Project Emissions
(7) Sovereign debt
  • Outstanding amount of sovereign debt
    (book value)
  • Purchasing Power Parity (PPP) - adjusted GDP
  • Sovereign emissions
  • *EVIC (Enterprise Value Including Cash) is the sum of the market capitalization of ordinary and preferred shares at fiscal year-end, the book values of interest-bearing liabilities (bonds + borrowings), and non-controlling interests, without deducting cash or cash equivalents.

Source: Created from PCAF “Financed Emissions The Global GHG Accounting & Reporting/PartA” and the Ministry of the Environment “Report on the Utilization and Advancement of Portfolio Carbon Analysis”.

  1. Home
  2. Sustainability
  3. Environment
  4. Response to Climate Change (Disclosure Based on the TCFD Recommendations 2023)
  5. Approach for Measuring GHG Emissions within Investment and Loan portfolios